Google's YouTube Mobile Phone Service Is Born to Lose

By Steve Bryant  |  Posted 2006-12-04 Print this article Print

YouTube's deal with Verizon to allow access to a limited number of clips via mobile phones is a mixed bag for consumers. And while YouTube may get some credit for pressing forward with mobile plans, the terms of the deal actually run counter to YouTube's and Google's consumer-based ethos. The Verizon-YouTube plan is neither free, community-based nor easily accessible.

First, by moving YouTube clips to mobile phones, YouTube is offering a different value proposion. On the Web, the proposition is free access to a nearly unlimited cache of clips. On a Verizon phone, the value proposition is paid access to the best clips (as judged by YouTube) at any time. YouTube is merely trafficking in brand recognition. [1]

And access to a limited number of YouTube clips -- especially for $15 per month -- won't be an adoption driver. Verizon already has several content deals with the likes of the NBA, NASCAR, MTV and Comedy Central, to name a few. Access to that content costs $15 per month. Lowering the price for YouTube would mean undercutting other partners, something Verizon is apparently reluctant to do.

Perhaps the biggest reason YouTube and Verizon aren't offering complete access to all YouTube's clips is that all Verizon phones aren't enabled with Flash Lite Flash-enabled. I would imagine that, for now, YouTube has to specially prepare selected clips for viewing (to optimize for mobile devices, and because they're already doing some legwork in selecting the clips). YouTube has some infrastructure work to do before it opens up the entire site to carriers (try accessing it via your mobile phone right now). And from what I read, mobile phones are at least a year away from ubiquitous Flash support.

So why make this deal? In the chess game that is the expansion of Internet opportunities, YouTube's daddy Google is thinking several steps ahead. Given that Google is betting on increased mobile Internet access, it makes sense to start making content deals with the carriers now. Google ostensibly benefits from usage data, while Verizon gets more brand-name content. Verizon also gets to keep a possible enemy close. The carriers are probably concerned that Google might disintermediate their walled gardens of content. I don't think anyone would be surprised if Google eventually developed a mobile access media portal.

[1] It's also interesting to note that by pre-selecting the best clips, YouTube is actually mimicking Metacafe's business plan. Metacafe has created value by pre-screening clips and featuring the best ones. In a world of increasing media volume and limited attention, that approach has garned Metacafe significant page views and time spent on-site.


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